The priorities for those that are currently impacted by the widespread flood situation are facing many challenges and priorities in protecting property from further damage, seeking immediate financial relief and getting on with the clean-up. While addressing issues around boats and watercraft may seem less important at this stage, there are obligations for loan holders attached to a boat under finance damaged by flood.
With the areas affected around the Murray River and many other inland rivers very popular with recreational boaters, it is highly likely that many boat owners may have concerns about their boat loans. Worrying about loan and finance commitments can add to the stress of the overall situation. We have compiled a guide to what boat owners with a boat under finance damaged by flood can do to address insurance, a current loan and source new finance for a replacement vessel.
Boats Under Finance – action required
There are a number of scenarios where boat owners affected by floods with their boats under finance may need to take some form of action:-
- Where the boat has been damaged/written off due to the flood or heavy rainfall.
- Where they are unable to meet boat loan repayments due to changes in their income resulting from the floods.
- Where a replacement boat is required with new finance.
We will address each scenario individually. The scenarios and actions recommended can apply to all types of boats and watercraft, including PWCs, ski boats, wake boats, houseboats and others.
Written-off and Damaged Boats
With many boat owners in the current flood-affected regions, it is quite possible that boats may have sustained irreparable damage. Trailer boats and PWCs may have been in garages, sheds or on the street when the flood hit or vessels may have been swept off their moorings and damaged. Where those boats are under finance, there are processes for owners to undertake.
The Secured Boat Loan is the most popular form of finance for new boat purchases. This form of finance carries the condition that the boat be insured for the full boat loan term. Owners will typically be requested for updated insurance information from the lender each year when the policy is due for renewal.
In the event that the boat which is subject to finance is damaged, secured boat loan holders should:-
- Make contact with the insurer either by phone or online to lodge an insurance claim and ensure that the policy does cover for flood damage.
- Insurers have varying claim processing procedures which will be advised at the time.
- The lender holds a financial interest in the boat and should be contacted to advise that an insurance claim has been lodged.
- The loan holder is still responsible for meeting the scheduled boat loan repayments even after an insurance claim has been lodged. This is extremely important and failure to do so may result in long-term poor outcomes. Where repayments are not met, the lender has the right to follow the default procedure. This may include a negative entry in the credit report. An outcome which can result in issues in regard to loan and credit applications in the future. The credit profile forms an important part of the loan approval process and can be a key determinant in the interest rate offered.
- The claim process will include the lender being paid the due amount which should cover the total amount outstanding on the loan. If the insurance payout is greater than the monies due to the lender, that balance is payable to the insured.
Relief for Boat Finance Repayments
Flood events can result in disruption to lives and livelihoods. For those that have a boat loan and find themselves in a situation where their income is impacted, they may seek relief from boat loan repayments. It is essential that this be addressed directly with the lender rather than payments simply not be made.
As noted in the point above, failure to meet repayments can result in poor outcomes especially when a new boat loan is required.
Lenders have guidelines in place in regard to requests for repayment relief. These will vary and will depend on the individual lender.
New Boat Finance for Replacement Watercraft
For many boat owners, replacing damaged vessel is a priority and with the holiday season not far away, it is very realistic that many would wish to proceed with this as quickly as possible. There is no obligation to wait until after the insurance on the existing loan is finalised before proceeding to apply for new finance. The process for a new boat loan can commence at any time.
Your Jade Boat Loans consultant will handle the process so you can concentrate on other matters regarding the clean-up and flood recovery. We will explain to our lenders that the current boat loan commitment is due to be finalised through an insurance claim so this does not have an impact on the application and the loan offered.
The interest rate for the new boat loan will be based on current interest rates. The application will be assessed on the current credit profile and financial position.
We hope this guide has been of assistance and if you have further questions please contact us to discuss your concerns or queries.
Contact Jade Boat Loans on 1300 000 003 for boat finance to replace flood-damaged watercraft.
DISCLAIMER: THE INFORMATION AND SPECIFIC DETAILS CONTAINED IN THE CONTENT OF THIS ARTICLE HAVE BEEN PREPARED AND ARE PRESENTED PURELY AS GENERAL INFORMATION AND NOT INTENDED AS THE ONLY SOURCE OF FINANCIAL ADVICE FOR BOAT BUYERS AND LOAN BORROWERS. FOR THOSE THAT CONSIDER THEY REQUIRE SPECIFIC ADVICE, THEY SHOULD CONSULT WITH A FINANCIAL ADVISOR. LIABILITY IS NOT ACCEPTED IN REGARD TO ERRORS AND MISPRESENTED DATA AND DETAILS HEREIN.